T7 by WorldatWork Valid Free Exam Practice Test

Question 1

What are the two guiding principles of accrual accounting?

A. Revenue recognition and matching B. Expense recognition and matching C. Revenue recognition and measurement D. Cost and materiality

Correct Answer: A

Question 2

In a defined contribution benefit plan, who assumes risk?

A. Employees B. Both employees and employers C. Employers

Correct Answer: A

Question 3

What is the main objective of IAS 19?

A. To prescribe the accounting and disclosure for employee benefits B. To draw a distinction between long and short term benefits C. To draw a distinction between a defined contribution and defined benefit plan D. To prescribe the timing of payments

Correct Answer: A

Question 4

Issuance of interim reports is an example of what enhancing characteristic?

A. Relevance B. Comparability C. Verifiability D. Timeliness

Correct Answer: D

Question 5

What are the usual and customary costs that a company incurs to support its main business called?

A. Operating expenses B. Total expenses C. Current liabilities D. Current debt

Correct Answer: A

Question 6

Level 3 of the conceptual framework for financial reporting includes five basic assumptions. Which of the following describes the basic assumption of economic entity?

A. The company lasts long enough to fulfill objectives and commitments B. Transactions are recorded in the periods in which the events occur C. The company can divide its economic activities into time periods D. The company keeps its activity separate from its owners and other business units

Correct Answer: D

Question 7

Which of the following are ingredients of the fundamental characteristic of relevance?

A. Predictive value and confirmatory value B. Timeliness and understandability C. Relevance and faithful representation D. Cost and materiality

Correct Answer: A

Question 8

When does a present obligation exist?

A. When the employee renders service B. When the company has no realistic alternative but to make the payments C. When the company recognizes the expected cost of profit-sharing and bonus payments D. When a change in the company's informal practices would cause unacceptable damage to its relationship with employees

Correct Answer: B

Question 9

Company XYZ outsourced its printing services to a specialist printing firm. The specialist firm took responsibility for the staff, though the team remains on Company XYZ's premises. Which of the following is true?

A. Because they remain on your premises, they are considered staff costs B. Due to the outsourcing of the staff, they are now considered service-supplier costs rather than staff costs

Correct Answer: B

WorldatWork International Financial Reporting Standards for Compensation Professionals - T7 Exam Practice Test